Investor Calls For Sale of ShopNBC

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Just three weeks after announcing that its CEO William Lansing has stepped down, ValueVision Media is under fire from one of its largest investors, who in a Securities and Exchange Commission filing Nov. 13 praised the company for some of its recent management changes but also called for the company to be sold.

ValueVision, which operates the ShopNBC home shopping network, said on Oct. 26 that Lansing, who had led the company since 2003, was stepping down at the request of the board of directors. That news came in conjunction with the shopping channel reducing its guidance for the full year. Revenue growth is now expected to be in the low single digits -- instead of between 6% and 8% -- and cash flow is expected to be in the $5 million to $10 million range. ValueVision had previously forecasted cash flow would be in the $15 million to $20 million range.

According to the filing, Soundpost Partners managing member Jamie Lester sent a letter to ValueVision chairman and interim CEO John Buck on Nov. 12 praising the company for its efforts to improve operations and reshuffle leadership. But Lester added more needed to be done. Soundpost owns about 2.8 million ValueVision shares, or about 7.5% of its outstanding stock.

Lester called for ValueVision to sell its Boston television station, monetize its “ValuePay” receivables – which would raise ValueVision’s cash on hand to $220 million. The investor added that $170 million of that cash could be returned to shareholders in an $8 per share Dutch tender offer. Finally, Lester said that ValueVision should “consider retaining an investment bank to solicit potential interested strategic and financial acquirers.”

While Lester did not identify any of those potential acquirers, he stated that in the past ValueVision has received several informal inquiries from home shopping, traditional retail and financial companies at significantly higher prices.

“These inquiries may not been formally presented to the board of directors, and the acquirers’ intentions may have changed,” Lester wrote. “However, we believe the strategic and financial rationale for these potential acquirors is fairly obvious, and thus are confident that there would be significant interest should a process be initiated.”

ValueVision stock was priced at $5.15 per share in early trading Wednesday, down 6 cents each.

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